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Two Top Chains Sticking With Promotion Plans

Despite pressures from the weak sales environment and store liquidations by Circuit City and Tweeter, CE retailers and manufacturers are sticking to their promotional plans for the holidays, at least for the time being, executives at Best Buy and hhgregg said.

“Although I can’t predict the future, I haven’t heard of any irrational promotional actions of any real consequence,” Best Buy’s Mike Vitelli, customer operating group executive VP, told TWICE recently.

What’s more, Best Buy’s president/COO Brian Dunn, speaking before a small media gathering at company headquarters, pledged the No. 1 consumer electronics chain “won’t initiate any irrational moves,” as a price spiral “is not in anyone’s best interest.”

Dennis May, president/COO of hhgregg, the multiregional CE and appliance chain, similarly described the current marketplace and the industry’s planned holiday promotions “as relatively rational.”

Speaking to analysts during an earnings conference earlier this month, May noted, “The holidays are always competitive, but the promotions we see are not much different that what we’ve seen day in, day out.”

Both companies acknowledged that vendors are also feeling the pain of an ailing economy and a consolidating retail landscape. But rather than simply squeeze their suppliers for better pricing, the chains are using the opportunity to work more closely with their key vendors and create strategic business plans that stretch well beyond the current quarter.

“Our vendor relationships have never been stronger or more effective,” Dunn said. “We’re focused on strategic arcs. We believe we should try to grow the pie.”

Jerry Throgmartin, chairman/CEO of hhgregg, assured analysts that “the sun will come out tomorrow,” and that his company will be well-positioned when it does by having strong supplier relationships in place.

In the meantime, the close partnerships have allowed both chains to navigate the volatile marketplace by modifying their plans on a weekly basis in response to changes in their sales mix, Vitelli and May said separately.